Crimes Act 1914 (Cth), s 16A, s 17A.

DPP (Cth) v Gregory (2011) 34 VR 1; [2011] VSCA 145 and Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45 considered.

Mr J Carter, Acting Commonwealth Solicitor for Public Prosecutions

1. On 29 April 2019, the appellant's trial in respect of one charge of attempting to dishonestly obtain a financial advantage by deception from a Commonwealth entity commenced in the County Court. The next day, before a jury had been empanelled, the appellant changed his plea to guilty.
2. On 9 October 2019, the appellant made an application to change his plea. The change of plea application was heard in April 2021, and refused on 3 May 2021. The plea hearing took place on 16 March 2022.
3. In short, the appellant's offending consisted of him, over the course of two days, falsely amending 66 Business Activity Statements ('BAS') that he had previously submitted to the Australian Taxation Office ('ATO') in relation to wages, pay as you go withholdings tax ('PAYG') and superannuation payments withheld by his company, EC Services Pty Ltd ('EC Services'), from employee wages. The amendments caused all previously recorded amounts of PAYG tax withholdings to be changed to zero and, as a result, PAYG credits of $390,766 were applied to the EC Services account. These credits offset an accumulated debt owed by EC Services and left a credit balance of $144,538. About a fortnight later the appellant sought, unsuccessfully, to be paid that credit balance into his personal bank account.
4. On 31 March 2022, the appellant was sentenced as follows:

• Attempt to dishonestly obtain a financial advantage by deception from a Commonwealth entity

• To be released after serving 18 months of the sentence of imprisonment on entering a recognisance in the sum of $5,000 to be of good behaviour for 3 years.

1. On 14 November 2022, Priest JA granted the appellant leave to appeal against sentence on the following grounds:[1]
   1. In all the circumstances the sentence imposed is manifestly excessive and offends against the principle of proportionality. The particulars of this ground is [sic] as follows:
      1. The Learned Sentencing Judge erred in that he did not give any weight, or any sufficient weight, to a relevant matter, namely the appellant's antecedents.
      2. The Learned Sentencing Judge erred in his characterisation of the offending, namely that he overstated the gravity of the offending conduct:
         1. By incorrectly minimising the apparent lack of sophistication of the offending; and
         2. Giving undue weight to the course of conduct element of the offending.
   2. The Learned Sentencing Judge erred in that he did not take into account a relevant matter, namely the appellant's prospects for rehabilitation.

1. It is convenient to give a more detailed summary of the appellant's offending.
2. The appellant operated a tax and management accountant business as the sole director of EC Services, a registered company.
3. EC Services was a Bank of Queensland ('BOQ') franchisee from August 2006-February 2015 pursuant to an 'owner-managed branch agreement'. That agreement stipulated that the agent and director of EC Services would have sole responsibility for the engagement of staff, training costs, remuneration, superannuation entitlements, taxes and worker's compensation. During the operation of the franchise, EC Services retained employees who received payslips and understood that the company was forwarding PAYG withholdings to the ATO on their behalf.
4. From August 2012 EC Services failed to lodge BAS and failed to forward PAYG withholdings. This resulted in an audit by the ATO. Following that audit of BAS for the period 1 July 2012 to 30 June 2014, the ATO assessed that EC Services owed PAYG withholdings in the amount of $121,832, as well as various other amounts in superannuation guarantee charges, penalties and interest. The total sum was $199,019.
5. On 17 October 2014 the ATO sent a letter to the appellant in his capacity as director of EC Services advising of the result of the audit.
6. EC Services failed to pay the $199,019 owing to the ATO.
7. On 28 August 2015 the ATO commenced proceedings in the Supreme Court of Victoria to wind up EC Services.
8. On 29 September 2015 the appellant's legal representatives advised the ATO that the amount the ATO said it was owed was incorrect and that there were 'amendments' which were anticipated to offset these liabilities.
9. On 21 October 2015 the appellant's legal representatives forwarded partially complete BAS to the ATO's legal representatives. The appellant claimed that EC Services was in fact owed a refund by the ATO. He sought, and was granted, an adjournment of the wind up proceedings.
10. On 9 November 2015 the appellant's legal representatives emailed 68 'up to date,' unsigned BAS and Income Tax Return forms for the period between July 2006 to October 2015 to the ATO's legal representatives. Each BAS recorded PAYG as zero.
11. On 23 and 24 November 2015, the appellant amended 66 BAS records related to EC Services for periods dating between July 2006 and July 2013 and August 2013 and September 2014. The amendments were made via the Tax Agent Portal. All of the previously recorded amounts for PAYG tax withholdings were reduced to zero. As a result, PAYG credits in the amount of $390,766 were applied to the ATO's Integrated Client Account for EC Services. These PAYG credits offset the accumulated debt and left a credit balance of $144,538.
12. The wind up proceedings were dismissed on 25 November 2015.
13. On 7 December 2015, the appellant requested, via the Tax Agent Portal, that the $144,538 credit be refunded into a nominated bank account in his name. The refund was not paid.
14. On 9 December 2015 the ATO commenced a new audit into EC Services in relation to the amendments to the BAS by the appellant on 23 and 24 November 2015.
15. On 14 December 2015, the ATO contacted the appellant to discuss the revised BAS and GST annual returns. The appellant confirmed that he was the sole director and authorised tax agent for EC Services. He disputed that he was responsible for the PAYG withholdings for the BOQ franchise because BOQ's head office had assumed control of his staff. He admitted that staff had been recruited and employed by EC Services, wages for those staff had been paid and tax withheld by EC Services and that when his franchise was taken over all his staff had been replaced except for one.

1. The sentencing judge summarised the appellant's offending[2] before noting the appellant's unsuccessful application to change his plea.[3] His Honour then detailed the appellant's background, noting that he was born in Sri Lanka and had lived in Australia for about 30 years. The appellant had worked as a tax accountant for over 20 years, having obtained tertiary qualifications.[4] The judge recorded the medical conditions suffered by the appellant to include elevated blood pressure, high cholesterol, ischemic heart disease, degenerative neck disease, type 2 diabetes, hypothyroidism and Dercum's disease. The appellant's diagnosis of low grade, chronic mixed anxiety depression order with significant mood disturbance was also noted.[5]
2. His Honour then referred to a report by Dr Lester Walton, psychiatrist, tendered on behalf of the appellant on his plea. The report was some two and a half years old. Dr Walton referred to a brief history of admission to inpatient psychiatric care in 2004, the appellant's then level of depression and long history of chronic pain. Dr Walton considered the appellant to be an intelligent but psychologically immature man who lacked insight into his offending and who had not demonstrated a fully mature remorse.[6]
3. The judge then referred to character references tendered on behalf of the appellant, noting that while those referees considered him to be a person of good character and intellect, the references were at least two and a half years old and none made any mention of the appellant's offending.[7]
4. His Honour then turned to consideration of the legal purposes of the sentencing exercise. The following exchange occurred.

[33] [HIS HONOUR]: Section 5(1) of the Sentencing Act provides that the only purposes for which sentences may be imposed are to punish the offender to the extent - just before I continue reading that, I am not sure I am not wandering into error there - does s5 of the Sentencing Act apply to this matter?

[34] [PROSECUTOR]: No, Your Honour.

[35] [HIS HONOUR]: I would not have thought it did. I do not know what came over me.

[36] [PROSECUTOR]: In terms of the principles, Your Honour, s16A(2) of the Crimes Act[8], Your Honour, 1914, common law.

[37] [HIS HONOUR]: Yes. Yes, thank you. In any event, matters that I consider that I should take into account when sentencing you are the maximum penalty that has been prescribed by Parliament, namely 10 years' imprisonment. Current sentencing practices - and I will come back to that in a moment. The nature and gravity of the offence. Your culpability and the degree of responsibility for the offence. Whether you pleaded guilty, and if so at what stage of the proceeding. Your previous character, and the presence of any other aggravating or mitigating factors concerning you.

1. The sentencing judge then continued. His Honour referred to the appellant's plea of guilty, noting that despite it being late it had utilitarian value. Given the appellant's unsuccessful application to change his plea, the judge was not satisfied that the appellant had demonstrated any genuine remorse.[9]
2. His Honour took into account the appellant's age and various health problems.[10] The judge also noted the COVID-19-specific difficulties of custody.[11]
3. The judge referred to an argument advanced by the appellant at his plea about his grievance at his perceived ill-treatment by the BOQ culminating in the offending. His Honour noted that no evidence had been tendered concerning a franchise dispute and, in any event, whatever the behaviour by the BOQ, it was not and could never have been justification for the appellant's offending.[12]
4. His Honour characterised the appellant's offending as 'premeditated', noting the substantial sum involved and the known falsity of the information provided to the ATO by the appellant.[13] The judge determined the gravity of the offence to be 'serious' and the moral culpability of the appellant to be 'high'.[14] His Honour referred to the maximum penalty and the importance of denunciation and deterrence, both general and specific, as sentencing considerations.[15] His Honour also noted that under Commonwealth criminal law the maximum penalty for an attempted offence and a completed offence are the same.
5. His Honour then referred to the decision of this Court in DPP (Cth) v Gregory[16] concerning relevant sentencing principles for taxation fraud and noted that the appellant's offending undermined the system of revenue upon which the community relies.[17] The judge rejected the appellant's argument that his offending was transparent and unlikely to succeed. His Honour noted that BAS and taxation matters more generally are complex and the system relies both upon the honesty of those submitting documentation to the ATO and the efficiency of the Commonwealth public service. His Honour further noted that as a consequence of the appellant lodging the false BAS, the ATO withdrew its application to wind up EC Services, and that it was the ATO's decision to conduct a further audit which revealed the offending.[18]
6. The judge noted that the comparative cases identified by the Crown were of limited assistance. His Honour recorded his satisfaction that any sentence which did not involve a period of incarceration would neither adequately reflect the seriousness of the appellant's offending nor satisfy the purposes for which the sentence must be imposed.[19]
7. After announcing the sentence and attending to the execution of the recognisance release order, His Honour stated that he did regard, although it was not noted in the written remarks, that the appellant had no relevant prior convictions.[20]

1. The appellant argues that the sentence imposed was manifestly excessive and amounts to disproportionate punishment.
2. Three particulars are advanced to support this submission. First, that the judge placed insufficient weight on the appellant's antecedents. Second, that the offending was less sophisticated than found by the sentencing judge. Third, that although the offending was premeditated and amounted to course of conduct, it was temporally confined.

1. The appellant argues that, as shown by the Reasons, the judge completely failed to consider the appellant's prospects of rehabilitation despite being mandated to do so by s 16A(2)(n) of the Crimes Act. Had rehabilitation been considered by the judge, the importance of specific deterrence in the sentencing synthesis would have been reduced.

1. The respondent argues that the sentence imposed is wholly within the range open to the sentencing judge. Well established sentencing principles in 'white collar' offending require, in the absence of powerful mitigating factors, the imposition of a term of imprisonment. General deterrence assumes great importance given the need to protect the revenue.
2. It is submitted that the sentence imposed by the sentencing judge is proportionate to the gravity of the offending having regard to the relevant sentencing principles and the circumstances of the offending. The respondent submitted in oral argument that, if anything, the sentence was lenient.

1. The respondent argues that the absence of express consideration of the appellant's prospects of rehabilitation in the Reasons does not indicate that the sentencing judge failed to take a material consideration into account. First, a sentencing judge is not required to articulate every matter considered in arriving at the sentence. Second, his Honour articulated that he would have regard to all relevant matters delineated in s 16A(2) of the Crimes Act. Third, it is unlikely that the experienced sentencing judge would have completely omitted any consideration of rehabilitation. Fourth, the issues relevant to rehabilitation were expressly agitated during the plea hearing.

1. As is well established, the ground of manifest excess will only succeed if it can be shown that the sentence imposed was wholly outside the range of sentencing options available to the sentencing judge.[21] That is, it must be shown that it was not reasonably open to the sentencing judge to come to the sentencing conclusion which he or she did, if proper weight had been given to all of the relevant circumstances of both the offending and offender. It is a stringent requirement, difficult to satisfy.[22]
2. In sentencing offending against the laws of the Commonwealth, sub-s 16A(1) of the Crimes Act establishes that the sentencing court must impose a sentence that is of a severity appropriate in all the circumstances. Subsection 16A(2) of the Crimes Act establishes that the court must take into account a non-exhaustive list of matters that are 'relevant and known to the court'. Subsection 16A(2) accommodates the application of the common law principles of sentencing.[23] Judicially developed general sentencing principles are accommodated because they give relevant content to the statutory requirement in sub-s 16A(1) to impose a sentence that is 'of a severity appropriate in all the circumstances of the offence' as well as some expressions used in the various paragraphs of sub-s 16A(2).[24]
3. Section 17A of the Crimes Act relevantly establishes that a court shall not pass a sentence of imprisonment with respect to a federal offence unless the court, having considered all other available sentences, is satisfied that no other sentence is appropriate in all the circumstances of the case.
4. The seriousness of tax fraud and the particular importance of general deterrence in sentencing white collar offenders has long been judicially recognised by this and other courts.[25]
5. The High Court has emphasised that detecting such offending is not easy and serious tax fraud affects the whole community.[26] The complexity of the Australian taxation system and its reliance upon self-assessment has reposed on the taxpayer a heavy duty of honesty and means that deterrence looms large in sentencing offending against the revenue.
6. White collar criminals are likely to be rational individuals well able to balance the benefits of committing a crime against the costs of being caught and punished.[27] They are also likely to be first time offenders who fear the prospect of incarceration.[28] Personal mitigating factors and previous good character are thereby of lesser moment in the sentencing exercise.
7. It follows that absent 'powerful' mitigating circumstances, imprisonment will be the only sentencing option for serious tax fraud in many if not most cases.[29] A sophisticated degree of planning should, when accompanied by a lack of contrition, ordinarily lead to a more severe sentence of imprisonment.[30]
8. In our view the sentencing judge was correct to describe the appellant's offending as 'serious'. The appellant attempted to obtain a financial advantage of $390,766. He did so as a qualified and experienced accountant and in the face of his company being wound up on the application of the ATO by knowingly providing false information to the ATO 66 times. The purpose of the false information was to extinguish his liability to pay a significant sum owed in taxation revenue. That the 66 false alterations to the previously lodged BAS occurred over two days, as opposed to a greater period, does not diminish the seriousness of the behaviour. The appellant's dishonesty was not transparent or easy to detect. Its premeditated purpose was, for a time, achieved. The taxation liability of EC Services disappeared and the ATO withdrew its application to wind up the company the day after the last of the false alterations had been made. As the sentencing judge noted, it took a further audit by the ATO to reveal the true situation. And, the appellant's offending was aggravated by his desire to have the amount of $144,538 credited to EC Services after the tax liability had evaporated paid into his personal bank account.
9. We are further of the view that his Honour was correct to describe the appellant's moral culpability as 'high'. The appellant's behaviour was not simply a breach of the duty of honesty reposed in each tax payer, but a breach of trust by an accountant, company director and Tax Agent with access to the digital Tax Agent Portal. His offending affected the whole community.
10. Accordingly, the sentencing judge was correct to emphasise principles of general and specific deterrence as well as denunciation.
11. We are also of the view that the sentencing judge considered and gave appropriate weight to the mitigating factors the appellant could call in aid. The absence of remorse[31] was demonstrated by the very late plea, the attempt to change the plea, the evidence of Dr Walton and the appellant's continued assertion that the BOQ was to blame for his situation. The utilitarian benefit of the plea was accorded full weight, and the timing of the plea considered.[32] The judge considered the impact of the COVID-19 pandemic upon the appellant's experience of custody. His Honour gave appropriate weight to the character, antecedents, age, and physical and mental condition of the appellant[33] and did so despite the scant and dated evidence tendered. That the judge referred to his consideration of the appellant's lack of prior convictions other than in the main body of the Reasons is not material.
12. We have separately considered the issue of the appellant's prospects of rehabilitation[34] below.
13. Further, the sentencing judge recorded his satisfaction that no sentence other than one of imprisonment was appropriate in all the circumstances.[35] His Honour was correct in that conclusion. As we have said, the offending was serious, the appellant's moral culpability was high and the mitigating factors available to him were not powerful.
14. In balancing the factors relevant to both the offending and the appellant, it cannot be said that the sentence of three years' imprisonment to be released on a recognisance release order after serving 18 months imposed by the sentencing judge was not 'of a severity appropriate in all the circumstances'.
15. It follows that ground 1 cannot succeed.

1. There is no doubt that the sentencing judge failed to make express reference to the issue of rehabilitation in the Reasons. However, that alone does not make good the appellant's argument that his Honour failed to take account of a mandatory consideration in the sentencing exercise.
2. While it would have undoubtedly been preferable had the Reasons recorded the judge's assessment of the appellant's rehabilitation prospects, the sentence imposed and the other matters explained in those Reasons compel the conclusion that his Honour did turn his mind to the issue as part of the instinctive synthesis.
3. The judge made reference to the appellant's lack of prior convictions, his age, health and other personal circumstances, his character and professional reputation as an accountant, as well as his lack of contrition and the reasons for it. These are all matters relevant to an assessment of the appellant's prospects of rehabilitation. The issue of rehabilitation was discussed during the plea hearing. Further, the assessment of rehabilitation prospects in this matter was far from difficult. Despite the seriousness of the appellant's offending and lack of contrition, his prospects were positive rather than negative. Even if expressly referred to, that finding would not have required a complicated analysis.
4. Finally, as we have said when considering ground 1, the sentence imposed was well within the range open to the sentencing judge. At the risk of repetition, it compels the conclusion that the sentencing judge took account of, and gave appropriate weight to, all relevant matters, including the appellant's prospects of rehabilitation.
5. It follows that ground 2 cannot succeed.

[1] At the hearing of the application for leave to appeal, the appellant abandoned proposed ground 3 and sought leave to add a fourth ground. Leave to amend the notice of application for leave to appeal by adding proposed ground 4 was refused.

[2] DPP v Shmuel [2022] VCC 417, [2]-[21] ('Reasons').

[8] Crimes Act 1914 (Cth) ('Crimes Act').

[16] (2011) 34 VR 1; [2011] VSCA 145 ('Gregory').

[21] Clarkson v The Queen [2011] VSCA 157; (2011) 32 VR 361, 384 [89] (Maxwell ACJ, Nettle, Neave, Redlich and Harper JJA); [2011] VSCA 157.

[23] Johnson v The Queen [2004] HCA 15; (2004) 205 ALR 346, 353 [15] (Gummow, Callinan and Heydon JJ); [2004] HCA 15.

[24] Hili v The Queen [2010] HCA 45; (2010) 242 CLR 520, 528 [24]-[25] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); [2010] HCA 45 ('Hili').

[25] See, for example, DPP (Cth) v Goldberg (2001) 184 ALR 387; [2001] VSCA 107. See also DPP (Cth) v Thomas [1998] 3 VR 188.

[26] Hili [2010] HCA 45; (2010) 242 CLR 520, 540 [63] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ).

[27] Gregory [2011] VSCA 145; (2011) 34 VR 1, 15-16 [53] (Warren CJ, Redlich JA and Ross AJA).

[29] Gregory [2011] VSCA 145; (2011) 34 VR 1, 16 [54] (Warren CJ, Redlich JA and Ross AJA).

[31] Crimes Act, sub-s 16A(2)(f).

[32] Crimes Act, sub-s 16A(2)(g).

[33] Crimes Act, sub-s 16A(2)(m).

[34] Crimes Act, sub-s 16A(2)(n).

[35] Crimes Act, s 17A.